In the original Star Wars trilogy, the Death Star was a massive space station-style weapon that gave our protagonists quite the adventure. The goal for these protagonists? To destroy the Death Star. The only problem? They had to target a hidden thermal exhaust port. All other efforts to hinder or damage the weapon would be thwarted due to improper targeting.
Commercial real estate can be the same way, specifically when it comes to the properties you’re targeting. What characteristics and features are most important? Let’s discuss a few of the most important factors when it comes to targeting in commercial real estate.
This is arguably the most important factor in any type of real estate, commercial or not. Consider both the existing location of the property you’re considering and the future changes the area may experience. What zoning and planning restrictions are in place? How close is the property to traffic and activity? Even things like noise can diminish value, so make sure you’re scouting your property location online and in person.
Is the property valued appropriately? Some are overvalued, others are undervalued and both give you leverage when it comes time for negotiation. Insurance, taxes and other expenses can all be affected by value, so make sure you compare values for sold properties in similar areas to gauge whether an investment is a good value or not.
Even if the property doesn’t have a high value or ideal location today, that could change in the future. For example, a shopping mall might not get much traffic or business in today’s environment, but a nearby new housing development could make the property highly desirable. Weigh your risks and consider potential before adding or removing a property from your list.
4. Market Volatility
Are you keeping up with market changes? Real estate is moving quicker than ever before, so a good valuation today could be a poor investment tomorrow. Act quickly, leverage commercial real estate software and stay apprised of industry changes so you can stay ahead of market volatility and target the right properties.
5. Industry Changes
Speaking of volatility, are you up to date on changes in commercial real estate as a whole? Lease accounting standards and other regulations change on a yearly (or more frequent) basis, so being aware of changes and requirements can help you avoid headaches. But it also helps you know what properties to target in the current environment (and what to avoid).
Finally, the technology you’re using for your targeting can be a factor in itself. Are you seeing all the data you need? Is it updated in real time? Can you collaborate with peers? If not, it might be time to consider adopting or switching to Quarem, which has all of these features and much more. There’s no better way to organize and power your CRE property targeting search.
Looking for more ways to boost your portfolio? Consider requesting a demo of Quarem today.